Fee disclosure call after CE triumph

Institutions are expected to press for full disclosure of all fees on both sides of a bid in the wake of the fiasco surrounding CE Electric's sucessful takeover of Northern Electric on Christmas Eve, writes Peter Rodgers.

The investment committee of the Association of British Insurers, the body representing the insurance funds, is understood to feel that full transparency is the fairest option.

There has been a furore over the disclosure of a controversial pounds 250,000 "performance" fee that Northern agreed to pay its adviser BZW.

It was the late disclosure of the BZW fee that led the Takeover Panel to delay the deadline for the Northern bid.

The fees paid to CE Electric's investment bankers, CS First Boston, have not had to be disclosed. There is no suggestion that there was a problem with CSFB's fees, but full and immediate disclosure on both sides could have prevented the controversy arising in the first place.

Meanwhile, Prudential hit back in a row over its late intervention in the bid, when it bought shares to support Northern.

The Pru believes that critics who accused it yesterday of risking a sharp fall in the share price misunderstood the situation.

The Pru said "The board of Northern said that if the right price was offered it would recommend it. The experience of other bids shows that when a large stake is acquired for cash it is often a prelude to further negotiation."

The share price would probably have fallen if Northern had kept its independence, but only in the short term. CE Electric, with its large stake, would in due course start talking to the board again about another offer.

Although a renewed hostile bid is banned for a year under the rules, an agreed deal could be put to shareholders earlier. Having bought its stake at 630p or less, compared with a bid price of 650p, CE Electric could have afforded to pay more.

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